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Hyundai agrees to settle overstated mpg suits

Washington -- Hyundai Motor Co. has reached a deal to settle dozens of class-action lawsuits over the Korean automaker's overstating of miles per gallon claims.

In a federal court filing in U.S. District Court in Los Angeles on Tuesday, Hyundai said it has agreed to a deal in principle to offer owners lump-sum payments.

The proposed settlement will also allow owners to get a voucher worth twice as much as the cash settlement toward the purchase of a new Hyundai -- or voucher worth 150 percent of the cash settlement toward dealer service.

In November, Hyundai and Kia Motors -- two Korean automakers controlled by the same conglomerate -- admitted overstating mileage on nearly 1.1 million vehicles in North America sold since 2010, including about 900,000 in the United States. The company withdrew its claims that four of its models got 40 miles per gallon -- the Elantra Accent, Veloster and Sonata Hybrid -- and was a key part of its advertising campaign in recent years.

Kia said it is still reviewing the settlement and hasn't yet decided whether to take part. Hyundai spokesman Chris Hosford noted the settlement is not yet final. "Settlement negotiations, as you can appreciate, are confidential, so we have no further comment at this time," he said.

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The automakers had agreed to compensate current and former owners, giving them debit cards that estimate the amount of additional money they spent on gasoline because of the lower gas mileage. The two automakers said last month they had set aside more than $400 million to pay claims.

Since November, at least 38 class-action lawsuits have been filed against the automakers.

According to documents posted Tuesday, the automakers will offer owners up-front lump sum payments and vehicles in the "4 for 40" mpg campaign will receive an increase in compensation over other owners.

For non-original owners, the lump sum payment is half of what will be offered to original owners.

The proposed settlement is likely to be filed by the end of March.

The suits filed against Hyundai and Kia claimed the automakers "knowingly or recklessly exaggerated estimated gas mileage and fuel economy rating information ... in order to entice" the motorists into buying the vehicles.

The issue came to light after an Environmental Protection Agency investigation turned up discrepancies between the window stickers and EPA testing.

The automakers had vowed to reimburse owners for the overstated fuel efficiency for as long as they own the cars, plus 15 percent. Hyundai said a typical owner of a vehicle in Florida driving 15,000 miles a year could get an $88 refund this year, in addition to future refunds for as long as they own the car.

EPA's investigation is ongoing; the agency may seek civil penalties over the misstated claims.

The restatement will reduce Hyundai-Kia's fleetwide average fuel economy from 27 mpg to 26 mpg for the 2012 model year. Individual ratings, depending on the car, will fall from 1 mpg to 6 mpg. Most vehicles will see combined city-highway efficiency drop by 1 mpg.

Hyundai has tweaked rivals for claiming 40 mpg in a specialized model, such as an Eco version, through its "Save the Asterisks" campaign. The automaker has touted its fuel efficiency and prodded others to be more forthcoming about the overall mileage average of vehicles that are actually sold. Some automakers have grumbled that because Hyundai doesn't sell pickups, it keeps its overall average high.

Hyundai, the typically media friendly automaker, has kept a much lower profile in recent months, avoiding most interviews at auto shows.

Consumer Watchdog, a consumer group, said that following a barrage of consumer complaints, it had asked the EPA to audit mileage of the Elantra in January. It ultimately filed a false advertising suit against Hyundai for widely advertising the "40 mile per gallon Elantra."

The lawsuit, filed in July in California, claims Hyundai misled consumers about gas mileage. It asserted "illegal advertisements caused tens of thousands of California drivers to purchase or lease 2011 and 2012 Elantras and consequently incur unexpected fuel costs."